The Facts -- New Internationalist

new internationalist
issue 168 - February 1987

The developed countries have created a powerful position for themselves
in the international marketplace - one which they are determined to
maintain by controlling trade regulations and financial institutions.

Export expansion

The export expansion of World Trade has largely come from manufactured goods. Sales of commodities like food and metals, in which developing countries tend to specialize, have lagged behind. The graph indicates the volume of world exports, taking 1960 as a base of 100 for all items.¹

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Protection Bracket

Countries often protect their balance of payments by imposing tariffs on imports. But equally effective are 'non-tariff' barriers - like setting quotes, or requiring that importers of certain goods have licences.

Developing countries are hit particularly hard by non-tariff barriers when they try to increase exports of manufactured goods. In 1984 the rich countries imposed such barriers on 21% of goods form developing countries but on only 11% of goods from other industrialized countries. This was primarily due to restrictions on clothing, textiles and footwear produced by developing countries²

The useage of non-tariff barriers by any country can be expressed as its 'coverage ratio' - an index which runs from 0 - 100. Australia and France operate a very extensive system of quotas and licenses. The high figure for the US reflects restrictions on the imports of fuels - for other goods the US average is a lot lower. The figure for Japan is suspiciously low - probably because there are many Japanese procedures not covered by this survey.

Those for a selection of countries in 1983 are indicated below.³

The Triangular Trade

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Half international trade is between one Western nation and another. The Third World plays a smaller part. And nowadays it had to generate a trading surplus with the West in order to repay debt - mostly by reducing imports. The diagram shows the flow of exports in 1985. Each percentage is of total world trade.¹

The Debt Yoke

	Debt service ratio (1984)⁴	Total debt $bn (1986)⁵	On the left some of the more heavily indebted countries ranked in order of their debt-service ratio. This is the percentage of a country's annual exports which the repayment of interest and capital represents in a particular year. If it is high this makes it more difficult to pay off the debt. The second chart (below) shows the external debt of developing countries ($bn).⁸
Bolivia	38	4
Morocco	38	19
Mexico	34	99
Ecuador	33	9
Egypt	32	38
Uruguay	30	4
Argentina	29	51
Brazil	27	107
Chile	26	21
Costa Rica	25	4
Nigeria	25	19
Colombia	24	11
Ivory Coast	21	8
Jamaica	21	3
Indonesia	15	36
Peru	15	14
Philippines	14	25
Venezuela	113	34
Zaire	8	6
Yugoslavia	7	20

The Big Bankers

Below are the top 10 international banks ranked according to their 1985 capital. Most of the assetts consist of money owing to the bank.⁷

Rank	Bank	Country	*Capital ($m)**	Net Income ($m)	Assets ($bn)	Employees
1	Citicorp	US	6550	998	167	81300
2	Credit Agricole	France	5224	145	123	74900
3	Barclays Bank	UK	4778	648	94	105900
4	Banco de Brasil	Brasil	4339	813	56	117498
5	Nat West	UK	4291	639	104	92000
6	J P Morgan and Co.	US	4142	705	67	13506
7	Fuji Bank	Japan	4009	340	142	15836
8	Deutsche Bank	W. Germ.	3905	354	95	48851
9	Union Bank of Sw.	Switz	3882	333	67	18677
10	Sumitomo Bank	Japan	3852	367	135	14486

This is a selection of other banks in the world's top 500.

Rank	Bank	Country	*Capital ($m)**	Net Income ($m)	Assets ($bn)	Employees
Aotearoa (NZ)
479	Bank of NZ	Aotearoa	164	35	4	7,773
Australia
52	Westpac	Australia	1,589	260	31	43,380
53	ANZ Bank	Australia	1,528	226	26	38,031
Canada
26	Royal Bank of Can.	Canada	2,408	357	67	37,430
35	Bank of Montreal	Canada	2,030	248	57	33,281
37	Toronto Dominion	Canada	1,839	304	34	20,381
UK
16	Lloyds Bank	UK	3,325	478	63	70,982
23	Midland	UK	2,667	176	83	78,590
40	Standard Chartered	UK	1,791	191	41	33,009

*Capital is used here to mean the total group shareholders' funds

Give and Take

For developing countries which have been receiving credit from banks and international agencies the net flow of money has been reversed. As interest payments now exceed the inflow of new loans, the poor countries are now financing the rich.⁸

Country Credit Ratings

Bankers rate countries according to their credit - worthiness - with some interesting results. This list, which takes into account factors like political stability, record of debt payment, openness to international capital and economic prospects, is compiled by the magazine Institutional Investor. The maximum rating is 100.⁴

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1 International Trade 1985/86, GATT 1986.
2 World Development Report, World Bank, 1986.
3 World Bank Economic Review, World Bank, September 1986.
4 Institutional Investor, June 1986.
5. Estimates as at Dec 1986, various sources.
6. World Military and social Expenditure, 1986, Ruth Leger Sivard, World Priorities Inc.
7. Euromoney, September, 1986.
8. UN Economic Survey 1986, United Nations.